With those words, Gov. M. Jodi Rell warned legislators Wednesday that the state will be forced to make deep cuts in spending to balance the $18 billion state budget as the nation heads deeper into a recession.

Rell delivered her message on opening day of the 2009 legislative session, which many lawmakers believe will be the most difficult since the battle over the creation of the state income tax in 1991.

The governor's annual State of the State address is traditionally interrupted by applause more than 25 times. But this year's 17-minute address was the gloomiest in more than a decade and was interrupted by applause only twice — once when Rell mentioned the recent election of Democrat Barack Obama as president and once when she made a joke about outgoing House Speaker James Amann's run for governor.

Otherwise, the speech was somber.

"Let's face it. It's scary," the Republican governor told the packed House chamber at the state Capitol, which was filled with legislators and their families.

In addition to a projected deficit of nearly $350 million in the current fiscal year, the state is facing a projected deficit of nearly $6 billion during the next two years to maintain the current level of services. Rell, though, said that funding those services will be difficult, adding that state taxpayers now have "a state government they cannot afford."

But neither Rell nor her budget director, Robert Genuario, would reveal details about the cuts that will be proposed during the annual budget address on Feb. 4.

Employee Unions

Because salaries, benefits and pensions for state employees represent an important segment of the state budget, the Rell administration's dealings with the unions will have a crucial impact on the budget in the coming weeks and months.

Genuario said no decision has been made on whether the Rell administration will ask the legislature to overturn an arbitrator's 141-page decision this week that awarded raises with a base rate of 3 percent, 2.5 percent and 2.5 percent during the next three years for more than 5,000 prison guards and other workers.

The legislature has not overturned any arbitration awards since the Republicans controlled the state Senate in 1996, and some lawmakers believe that rejecting any award is highly unlikely because some of the biggest supporters of the unions are in the Democratic caucuses. Democrats control more than two-thirds of all seats in the General Assembly.

The Rell administration is in the early stages of talks with the state-employee unions to see whether they can provide givebacks and concessions for about 45,000 union workers in order to save millions of dollars. Some legislators believe that personnel costs must be slashed — whether through an early retirement incentive program or layoffs.

Senate Republican leader John McKinney of Southport said the number of state employees might need to drop by 5 percent to 10 percent in order to balance the budget.

"I don't think we can survive this with the state workforce the size that it is now," McKinney said. "The bottom line is, our state government is too big, and we can't afford it now."

In an attempt to streamline the legislative branch, McKinney and his caucus offered an amendment Wednesday on the Senate floor that called for reducing the number of legislative committees from 22 to 14, including consolidations and combining the finance and appropriations committees. That would lead to the loss of nine full-time staff members and 18 sessional employees.

The plan, though, was rejected on a party-line vote in the Democrat-controlled chamber.

Senate President Pro Tem Donald Williams said it would be a mistake, in particular, to combine the budget-writing and tax-writing committees.

The new House speaker, Christopher Donovan, said it is "very encouraging" that the governor's office is talking to the unions, but he declined to say whether he believes the unions should provide concessions in order to save money.

"They are not the cause of this economic downturn," Donovan said of the unions.

The new House majority leader, Rep. Denise Merrill, said any changes in benefits in the union contract would require cooperation on all sides under a 20-year deal that was signed 12 years ago.

"They have the legal right to maintain their contract until 2017," Merrill said. "I do think state employees want to help. I really do."

The State Employee Bargaining Agent Coalition, known as SEBAC, issued a statement from several union members regarding Rell's speech, but the union members did not say whether they would be making concessions.

"The governor was right to observe that difficult economic times are when public services are needed most, and that's why we need to be extra careful to make sure we don't create bigger problems in the long run as we react to the crisis of the moment," said Catherine Osten, a correctional lieutenant for the state.

Reactions Varied

Republicans said Rell had struck the right tone on opening day, but some disagreed.

"I think it sums up where we are. We have difficult times nationally, difficult times in the state," Williams said. "She's obviously saving the specifics of what her proposals will be for her budget address in February."

One of her potential opponents for governor in 2010, Stamford Mayor Dannel Malloy, was less kind.

"The speech was the rough equivalent of the weatherman broadcasting the weather from outside, where it's raining," said Malloy, a Democrat. "I didn't need to know that. I knew it already. You can see it happening. I'm here because I thought there would be substance to the speech."

Joseph Brennan, the chief lobbyist for the Connecticut Business & Industry Association, was happy with the governor's speech, but he said it was premature to say what kind of tax increases the business community might support.

"Now, I know it's only the first day, but I think they are setting the right tone," Brennan said. "This is not business as usual, that we really need to put a lot of partisan issues aside."

Wrestling with the budget problems, Rell said she has lost sleep over the state's fiscal condition.

"I have spent countless hours in the last few weeks poring over every line item in our budget," Rell said. "We must make the right choices now so that we may close tightly the doorways of despair and open wide the windows of opportunity."

Reprinted with permission of the Hartford Courant.
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